Rate Request Reduced

Blue Cross Seeks Smaller Increase For Medigap Plans

November 10, 1994|By DIANE LEVICK; Courant Staff Writer

Blue Cross & Blue Shield of Connecticut is seeking slightly smaller rate increases on Medicare supplements than originally requested, but consumer advocates Wednesday skewered the company for the late filing of rate information.

Blue Cross is now requesting state Department of Insurance approval for a 9.4 percent rate increase on its most popular combination of Medicare supplement plans, instead of a previously announced 10 percent.

The policies, often called ``Medigap'' insurance, are bought by older people to pay some of the costs not covered by the federal Medicare program. About 140,000 Connecticut residents buy the insurance from Blue Cross.

The company filed revised rates, and related information on how much premium is expected to be paid out in claims on the policies, with the department on Tuesday -- the day before Wednesday's public hearing in Hartford.

Officials of United Seniors in Action, a coalition of labor and community groups, voiced outrage that the information was filed so late that people couldn't study it before the hearing.

In past years, Blue Cross provided information on profits and losses on the Medicare supplement policies, but ``now in 1994, they submit rate filings with significant gaps,'' said Ray Baginski, president of United Seniors. ``It is impossible for the consumer to deduce their projected profit on a policy.''

Insurance department officials, who said they, too, want more time to review the rate filing, heard testimony Wednesday, but decided to continue the hearing on Nov. 17 at 1 p.m. in Room 2C of the Legislative Office Building in Hartford.

Baginski said the state should establish uniform requirements for what information all Medigap insurers must file when seeking rate increases. That would ``prevent the kind of cat-and-mouse game which this rate filing entails, and would enable the consumer to understand just what they are paying for,'' he said.

By controlling access to information, Blue Cross ``is violating the spirit of the public hearing,'' said Gladys Gallagher, representing Seniors for Action in Asylum Hill and United Seniors in Action.

Harry J. Torello, president and chief operating officer of Blue Cross, declined to comment on the criticisms other than to say, ``We've given them all kinds of data. We probably give them more data than anybody else does.''

The proposed rates for 1995 are ``fair, and accurately predict the expected cost and utilization trends for 1995,'' Torello told department officials.

Rate increases would average less than 3 percent for Medigap plans sold on Aug. 1, 1992, or afterward, and would average slightly less than 7 percent for policies sold before that date, Torello said.

The quarterly premiums on the most common combination of plans -- ``Blue Cross 65 High Option'' and ``Blue Shield 65 Plan 81'' -- would rise 9.4 percent, from $308.70 a person to $337.71.

In the company's original rate request last month, the 1995 cost would have been $340.71.

Department officials said the rate revisions were due to an error in calculation and a change in rate- making methodology.

On the newer Medigap policies, Plan A customers would see a 4.23 percent rate decrease next year, and Plan B policyholders, a 2.28 percent drop. Rate increases on the other standardized plans range from 2.2 percent to 4.35 percent.

Torello, explaining the rate increases, cited a 15 percent increase in the number of hospital admissions by the Medigap customers this year, an increase in Medicare's hospital deductible for 1995, and a 7.1 percent increase in the Medicare fee schedule for doctors. Most Medigap plans pay the hospital deductible and part of doctors' fees.

In addition, there was a 22 percent increase in the use of nursing home benefits, Torello said. That reflects the trend of Medicare patients being moved from hospitals to nursing homes.

But under an ``outdated reimbursement structure,'' Medicare provides the most coverage for inpatient hospital stays, and significantly less for nursing home care, he added. As a result, private Medigap policies end up paying for that increased nursing home care, which is reflected in premium increases.

Blue Cross & Blue Shield didn't raise rates on its older Medigap policies for 1994. Some customers with newer policies paid higher premiums in 1994 and some paid less because of a new state law that banned rates based on age and sex.

A. Cynthia Matthews, executive director of the state's Commission on Aging, urged insurance regulators to consider older residents' fixed incomes when deciding rate cases. Connecticut has 120,537 residents older than 60 whose sole source of income is Social Security, and the average annual income of residents older than 65 is $22,000, she noted.